A good many people express incredulity with the consistent free-market, or libertarian, position. They consider opposition to the welfare state as something bizarre, rejection of unlimited democracy as almost un-American, and opposition to things like Social Security as bordering on outright callousness. For this reason it may be of some value to illustrate how a libertarian may respond to a prominent defense of Social Security, the quintessential American welfare-state policy.
A while back in the New York Times, Henry J. Aaron of the Brookings Institution, one of this country’s most prestigious Washington think tanks supporting nearly all welfare-state measures, laid out the case for the continuation of Social Security. Here is how he put his case: “Most individuals . . . do not do a very good job of planning for distant or unlikely events like retirement or disability. Moreover . . . since many people are already exposed to the risks of big stock market swings through 401(k) programs and Individual Retirement Accounts, there is good reason to maintain Social Security as a guaranteed benefit in which any investment or economic risks—as well as administrative costs—are spread across the generations and income levels. The wild gyrations in the stock market . . . underscore the point.” Mr. Aaron then added, “The reasons that led the nation to adopt social insurance are about as strong now as they ever were.”
This is indeed a standard and familiar way to defend Social Security and many other welfare-state measures. How can the libertarian insist that Social Security is immoral? Here is how.
Perhaps it is true that “most individuals do not do a very good job of planning for distant or unlikely events like retirement and disability.” This fact, if it is one, does not support in the slightest the imposition of various costs on other people who in fact do do a good job. Why should the negligence and oversight of some people impose burdens on others who are prudent and who use foresight? What is the point of being prudent if you are still burdened with the insolvency and debt of other people? We could justify bank robbery that way too: The savers should not complain when those who have failed to save take their money, since the thieves simply did not do a good job of planning. Furthermore, if most people aren’t good at planning for distant and unlikely events, why would most politicians, who must constantly worry about re-election, or bureaucrats, who need security as much as the next person, be better at this than the rest of us? No reason to think so at all.
What about the other concern, namely, stock-market volatility? This argument is deceptive because, in fact, over the long haul the stock market has long paid good returns. Moreover, the government’s management of wealth is far from a sure-fire guarantee against disaster. (The Social Security Trust Fund, for example, is a myth.) But never mind the mythology of government guarantees; what about the alleged propriety of having government force you to avoid taking bad risks?
Mr. Aaron and others of his persuasion should be reminded that it isn’t the proper function of government to be our mommies and daddies. Government folks are, after all, human beings, no different in wisdom and virtue from the rest of us. How dare they make themselves our guardians? It is our right to manage our lives as we see fit, even if there are serious risks involved. (Everything we embark on in life entails risk.) Why not oversee our marriages, sex lives, religious affiliations, and so on? Why not just forget about this “free country” stuff and make us all wards of the state? What is forgotten by Mr. Aaron & Co. is that citizens are not children and the less they are trusted with their own lives, the more inept they become not only at living life, but also at figuring out who should hold political office. Dumbing down America is what the Aaron political economy amounts to, nothing less.
In general terms, the libertarian thinks more of human beings than many people think of themselves, probably because he discounts much of what is implicit in American public education, where kids are mostly treated as units in a rather dumb herd. The libertarian holds on to the conviction that free men and women can—and often do—deal with life better than the ruling elite thinks they can.
To be sure, there are risks associated with living as free men and women. But they are not so great as the risks involved in allowing bureaucrats to violate our rights to free judgment and action, to life, liberty, and the pursuit of happiness.